VR set to become $1bn niche market in 2016

The virtual reality (VR) market is expected to break the $1 billion barrier this year, as more than 2.5 million headsets are expected to be sold.

According to Deloitte, despite the industry still facing technology barriers such as eye fatigue caused by devices, it is predicted that $700 million will be spent on VR hardware while $300 million will be going towards software.

The applications of VR are almost endless, especially in the gaming industry as well as in education, defence, health, sports and the media.

At CES, all the big players in this space unveiled their newest VR sets including Microsoft, Facebook’s Oculus, HTC, PlayStation, Nokia and Sony. A British start-up from Oxford, Rebellion, also announced that it will be pouring an extra £5 million into the development of a gaming VR set.

Regardless of the excitement around VR, Deloitte has warned that despite the millions of devices expected to be sold, VR will remain as a niche area in the market until computing power improves.

It said in a statement that enthusiastic reactions to VR at trade fairs or at industry conferences, based on a few minutes of usage, may not convert into mass market demand.

"While VR headsets may sell better than smart glasses or 3D TV glasses (…) using the technology may require a set of behavioural changes that the majority of people do not want to make.

"But the dream of being able to teleport anywhere by just donning a pair of googles might prove enough for some to continue using VR on a daily basis. The ambition to deliver on this dream is likely to keep many companies investing in the goal of making VR a commercial and virtual reality."

Speaking to CBR, Gordon Muehl, VP industrial internet at Infosys, said that VR is not new, and people have been working on it for over 20 years. He said: "What is different now is that cheap and reliable devices are now available to industry from the consumer space.

"We are familiar with augmented reality devices like Google Glass and speech recognition with Siri. Suddenly we can visualise adoption throughout industry."

According to other research, the VR market is set to skyrocket by 2020. TrendForce has predicted the industry to be worth $70 billion by then, with $20 billion spent on hardware and $50 billion spent on software as companies look into new immersive applications and experiences.

However, AR/VR advisor Digi-Capital has estimated the market to reach $30 billion by 2020, in a $150 billion share dominated by AR.

Looking into Gartner’s Hype Cycle published last year, the firm has put VR in a five to ten years time gap away from mainstream adoption.

Of the many factors behind the lack of mass adoption are the health impacts cause by VR sets. Research from Oasis has found that up to 50% of people suffer from simulation sickness when using VR devices.

Doug Magyari, CEO of IMMY, said that there are two critical aspects when talking about this technology: the physiological issues and psychological issues.

He told CBR: "The optical elements that have been used in the current devices create a lot of distortion and abstraction, and the eye needs to work on that, which is exhausting. Then you have another huge issue which is accommodation-convergence conflict [visual fatigue].

"The existing VR devices have not solved that problem. Until the units are built solving all these considerations, they will have a very hard time being adopted."

Becoming nauseous is not the only danger consumers face with VR. According to Magyari, if users are in the VR environment and content is not developed properly, it can cause permanent neural damage.

"You are talking about losing our inner ability to distinguish our spatial relationship. Whatever room you are in, your eyes and your brain are aware of where everything is in the room at the present time, and that is how you locate yourself and move around.

"The neurons that are associated with being able with establishing and maintaining your spatial coordination, spatial relationship are actually destroyed. It can actually induce trauma."

Despite concerns, doctors in Miami have this week proved one of the uses of VR sets in the healthcare space. Using a Google Cardboard VR set, they performed an operation on a four-month-old baby born with one lung and half a heart.

Doctors needed to visualise the heart in 3D, and used VR to get a real-time picture of Teegan’s heart in relation to all of her other organs allowing the operation to be carried more easily.

Muehl said: "It will be interesting to see how much precedent is given to VR at next week’s WEF meeting in Davos. VR is allowing people to explore important issues in a new way, and this is only going to develop throughout 2016."